UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported)       February 26, 2004
 
LABOR READY, INC.
(Exact name of Registrant as specified in its charter)

Washington	 	91-1287341	
(State or other jurisdiction of
incorporation or organization)	 	(IRS Employer
Identification No.)	
 	 	 	
1015 A Street
Tacoma, Washington  98402	
(Address of principal executive offices, including zip code)	
 	 	 	
(253) 383-9101	
(Registrant’s telephone number, including area code)	

 

 
ITEM 9.                                                      REGULATION FD DISCLOSURE
 
Copies of slide presentations which will be presented by us at the Morgan Stanley Business & Professional Services Conference held at Morgan Stanley’s offices in New York city on February 26, 2004 at 3:30 PM (ET), and generally to members of the financial and investment community from time to time (the “Investor Presentation”), are attached to this Report as Exhibit 99.1 and are also available on Labor Ready’s website, www.laborready.com.  The Investor Presentation is being furnished pursuant to Regulation FD and Item 9 of  Form 8-K.
 
In accordance with General Instruction B.2 of Form 8-K, the information contained in the Investor Presentation shall not be deemed “Filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

February 26, 2004	 	
 	 	
 	LABOR READY, INC.	
 	 	
 	By:	 	/s/ Joseph P. Sambataro, Jr.	 	
 	 	Chief Executive Officer	
 
2

 
EXHIBIT INDEX

 	Exhibit Number	 	Description	
 	99.1	 	Investor Presentation	
 
3

Exhibit 99.1

 
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[ LOG O]
 
INVESTOR PRESENTATION
1 ST QUARTER
2004
 
[GRAPHIC]
 
We Put People to Work.

 
SAF E HARBOR STATEMENT
 
Cautionary Note about Forward-Looking Statements
 
Certain statements made by us in this presentation that are not historical facts or that relate to future plans, events or performances are forward-looking statements within the meaning of the federal securities laws. Our actual results may differ materially from those expressed in any forward-looking statements made by us. Forward-looking statements involve a number of risks of uncertainties including, but not limited to, the risks described in the Company’s most recent 10-K and 10-Q filings. All forward-looking statements are qualified by those risk factors.
 
[LOGO]

 
SEN IOR MANAGEMENT TEAM

 	 	Years of Experience	 	
 	 	Labor Ready	 	Professional	 	
Joe Sambataro
CEO, president	 	7	 	32	 	
 	 	 	 	 	 	
Steve Cooper
 CFO	 	5	 	18	 	
 	 	 	 	 	 	
Tim Adams
 General Counsel	 	5	 	17	 	
 	 	 	 	 	 	
John Hopkins
 VP, Operations	 	7	 	12	 	
 	 	 	 	 	 	
Gary North
 VP, Operations	 	5	 	19	 	
 	 	 	 	 	 	
Tom Stonich
 VP, Human Resources	 	8	 	27	 	
 	 	 	 	 	 	
Rick Christmas
 CIO	 	1	 	27	 	

 
EQU ITY SNAPSHOT

• Exchange/Symbol	 	NYSE/LRW	 	
• Share Price as 2/6/2004	 	$	13.50	 	
• Fully Diluted Shares	 	51.7M	 	
• Average Volume (3-month avg.)	 	357,000	 	
• Market Capitalization	 	$	600M	 	
• 2003 Revenues	 	$	891M	 	
• 2003 Operating Income	 	$	32M	 	

 
COM PANY OVERVIEW
 
“We Put People to Work.”
 
• Largest supplier of temporary day labor in the U.S.
 
• Nearly 600,000 people employed annually
 
• 780 branches throughout the U.S., Canada and the U.K.
 
• Headquarters in Tacoma, WA.
 
[GRAPHIC]

 
FRA GMENTED, GROWTH INDUSTRY
 
•                   Staffing: $95 billion industry (a)
•                   Industrial staffing: $16 billion (a)
•                   Day labor market: $5 billion (b)
 
Day Labor Market Breakdown
 
[CHART]

(a)           2003 Staffing Industry Sourcebook
(b)           Research estimates

 
DIV ERSIFIED CUSTOMER BASE
 
•                   Nearly 275,000 customers
 
•       Largest customer represents less than 2% of sales
 
•     Average yearly sales per customer of $3,000
 
•       Over 400 industry classifications

Sales by Industry	 	 	 	
Construction & Landscaping	 	33	%	
Manufacturing	 	20	%	
Hospitality, Services & Other	 	20	%	
Transportation	 	10	%	
Wholesale	 	10	%	
Retail	 	7	%	

 
BRA NCH OFFICE MODEL
 
•                   Real-time matching of customer and worker needs
 
BRANCH OFFICE:
 
•          Process work orders
 
•          Assign work orders
 
•          Provide safety equipment and arrange transportation
 
WORK SITE:
 
•          Work performed
 
•          Customer endorses work order
 
BRANCH OFFICE:
 
•          Workers exchange work order for payment

 
STR ONG VALUE PROPOSITION
 
Attracting customers with:
 
•                   Elimination of workers’ comp
 
•                        and payroll tax administration
 
•                   National scale and multiple locations
 
•                   Dependable, temporary labor
 
•       Just-in-Time
 
•       President’s 100% Satisfaction Guarantee
 
Attracting workers with:
 
•                   Flexibility
 
•                   Work Today – Paid Today
 
•                   Bridge to Permanent Employment
 
•                   Safety Training
 
[GRAPHIC]

 
RAP ID BRANCH EXPANSION
 
Number of Branch Offices
 
[CHART]
 
•                   Quickly developed branch footprint
 
•                   Optimizing investment to extract leverage

 
[ LOG O]
 
[GRAPHIC]

United States:	 	699	
Canada:	 	36	
U.K. :	 	45	
 
Labor Ready has 780 offices in the U.S., Canada and U.K.

 
KEY BUSINESS STRATEGIES
 
•                   Grow current branch revenues and profits
 
•                   Expand in smaller markets in the United States and Canada
 
•                   Expand in the United Kingdom
 
[GRAPHIC]

 
GRO W CURRENT BRANCH REVENUES & PROFITS
 
•                  Increase same-branch revenues
 
•       Current branches at 50% of recruiting capacity
 
•                  Improve Branch Manager tenure
 
•       Compensation tied to Profits
 
•       Enhanced Training
 
•       Mentoring and Development
 
•                  Improve customer service
 
•                  Pricing and cost controls

 
SMA LLER MARKETS EXPANSION
 
•                   Opened 25 new branches in U.S. and Canada in 2003
 
•                   Plan to open 25 in 2004
 
•                   Smaller market branch model
 
•                   Smaller footprint with less cost
 
•       Populations of approx. 50,000
 
•       Minimal impact on existing branches

 
SMA LLER MARKET BRANCH LOCATIONS
 
[GRAPHIC]
 
•                   Current locations
 
•                   2004 Projected Openings

 
UNI TED KINGDOM EXPANSION
 
•                   Estimated 100 - 125 locations available
 
•                   Currently operating close to 50 branch locations
 
•                   Expanded geographic reach for core business

 
UNI TED KINGDOM EXPANSION
 
[GRAPHIC]
 
•                   Current locations
 
•                   Projected locations

 
FIN ANCIAL HIGHLIGHTS
 
•                   Improving revenue and profitability
 
•                   Consistent gross margins
 
•                   Controlled operating costs
 
•                   Significant operating leverage
 
•                   Strong balance sheet

 
FIN ANCIAL PERFORMANCE

 	 	2001	 	2002	 	2003	 	2004
Forecast(a)	 	
 	 	 	 	 	 	 	 	 	 	
•	 Revenue	 	$	917M	 	$	863M	 	$	891M	 	$940-$960M	 	
•	Growth	 	(-6	)%	(-6	)%	3	%	7	%	
•	EPS	 	$	0.23	 	$	0.28	 	$	0.41	 	$0.49-$0.52	 	
•	 Operating Income	 	$	14M	 	$	21M	 	$	32M	 	$39M-$42M	 	
•	Growth	 	(-15	)%	47	%	54	%	28	%	

(a) Based on management guidance issued on February 4, 2004

 
LON G-TERM GROWTH
 
Annual Revenue and Operating Income
 
[CHART]

No. of Branches	 	51	 	106	 	200	 	316	 	486	 	687	 	816	 	756	 	748	 	780	 	810	 	

(a) Based on management guidance issued on February 4, 2004

 
SEA SONAL BUSINESS
 
Quarterly Revenue

EPS	 	$	(0.09	)	$	0.08	 	$	0.18	 	$	0.08	 	$	(0.08	)	$	0.12	 	$	0.22	 	$	0.12	 	$	(0.02	)	

(a) Based on management guidance issued on February 4, 2004

 
20 YEA R TRENDS IN TEMPORARY STAFFING
 
U.S. Help Supply
 
[CHART]
 
Cycle Expansions and Contractions: (1) Economic expansion began in November 1982; (2) Economic contraction began in July 1990 and expansion began in March 1991; (3) Economic contraction began in March 2001.
 
Source:  Bureau of Labor Statistics and NBER

 
THR EE YEAR TRENDS IN TEMPORARY STAFFING
 
[CHART]

* Not seasonally adjusted.

 
BIL L RATE ECONOMICS
 
$12.25/hr. Bill Rate Illustration (a)

Workers’ Wages	 	$	7.00	 	$12.25 per hour bill rate	 	
 	 	 	 			
Workers’ Compensation	 	$	0.90	 			
 	 	 	 			
Payroll Taxes	 	$	0.75	 			
 	 	 	 			
Gross Margin ~ 30%	 	$	3.60	 			

(a)           Illustration only.  Amounts could vary depending on location, job type and stage of economic cycle

 
CON SISTENT GROSS MARGINS
 
Gross Margins As a Percentage of Revenue
 
[CHART]

 
GRO SS MARGIN TRENDS
 
[CHART]

E - Based on management guidance issued on February 4, 2004

 
SEL LING, GENERAL & ADMIN. COSTS
 
Trailing four quarters as a percentage of sales
 
[CHART]

E - Based on management guidance issued on February 4, 2004

 
BRA NCH MATURITY DRIVES REVENUE
 
2003 Branch Revenue and Maturity
 
[CHART]
 
Average branch age = 5.6 years

 
2005 Est imated Branch Revenue and Maturity
 
[CHART]
 
Average branch age = 7 years

 
BRA NCH PROFIT POTENTIAL

 	 	Sensitivity analysis based on	 	
 	 	 	 	 	 	
Revenue	 	$	1,100,000	 	$	1,300,000	 	
 	 	 	 	 	 	
Gross Profit	 	330,000	 	390,000	 	
Gross Profit Margin	 	30	%	30	%	
 	 	 	 	 	 	
Branch Expenses	 	200,000	 	210,000	 	
As a% of Revenue	 	18	%	16	%	
 	 	 	 	 	 	
Operating Income	 	$	130,000	 	$	180,000	 	
Operating Income Margin	 	12	%	14	%	

 
OPE RATING LEVERAGE DRIVES PROFITS
 
Earnings Per Share Sensitivity Analysis (a)
 
[CHART]

(a)           Earnings per share sensitivity analysis based on 790 offices, 30% gross profit margin, management’s estimates of fixed and variable expenses, regional and back office overhead and related assumptions, at varying levels of per office revenues.

 
STR ONG BALANCE SHEET

 	 	 	Q4 2003	 	Q4 2002	 	
•	Cash and investments	 	$	108M	 	$	91M	 	
•	Current ratio	 	2.9	 	3.0	 	
•	Restricted cash	 	$	111M	 	$	95M	 	
•	Workers’ compensation reserve	 	$	101M	 	$	86M	 	
•	Long term debt	 	$	75M	 	$	76M	 	
•	Shareholders’ equity	 	$	154M	 	$	132M	 	
•	DSOs	 	~30 days	 	~30 days	 	

 
INV ESTMENT HIGHLIGHTS
 
• Market leader in fragmented industry
• Large and growing market
• Diverse customer base
• Scalable and flexible model
 
[GRAPHIC]
 
Labor Ready is poised to realize significant operating leverage as it benefits from an economic recovery and the maturation of its branch expansion program executed in the 1990s.